Help & Advice

Can i give my car back to the finance company?

Hi, I took out a car on finance 12 month ago over a 3 year period. The car is costing far too much run and is now currently worth about £1500 and there is still £3500 left to pay on it.

Is there any way of handing the car back to call it quits or would I still have to pay a fee? I took it out with Carlyle finance which is now Motonovo but when buying the car i was told I could hand the car back after 18 months and I would be left with no car and no more payments. How true is this though as i am not not sure? Please help.

Richard


Answer

Hi Richard, a great question. When you get over 50% of the way through your hire purchase agreement or you have repaid 50% of the amount owed you are within your rights to hand the car back to the finance company.

It'd be worth reading your contract though and speaking with your finance company to see what their usual terms and conditions are. I know this is possible but sometimes lenders charge fees for exterior/interior damage etc - so depending upon the condition when they collect the vehicle.

Do your research and then please let me know how you get on as your experience will help others reading this Q&A section. When you need car finance again in the future please apply with us as we can usually beat dealer rates offered and provide a no obligation quote. You can also buy a car from any dealer nationwide. Have a great evening. Rachel

Answer correct as of September 2016

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Thank you, i'll get straight onto the phone to them and find out and post a reply to my outcome. Thanks for your help :)

Answer

Hi Richard, Thanks for using the Q&A. Firstly, we use equifax for our credit searches and I have never seen a voluntary termination shown on a credit profile. We only ever see a HP as settled or defaulted. I would advise that you contact equifax or experian and ask the question for clarity also. As far as I am aware the agreement will show as settled on your credit profile as the right to voluntary terminate is stated within your HP agreement and by handing the car back you are terminating the agreement.

This should not affect you obtaining a mortgage. As soon as the finance company dispose of the vehicle once you have handed it back they will settle/close the deal which will update your credit profile. Please beware that there may be certain charges should your car not be in a decent condition when you hand the vehicle back. Again, you'd have to speak with the lender as to their processes. Kind Regards, Rachel

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Hi, I'm in the same position, I've contacted Motonovo finance today and they have confirmed I can hand the car back after I have made 50% of the payments. However they also went onto say it would affect my credit rating if I choose to do this. Surely this cannot be right?

Answer

Hi Tracy, as long as you make all your payments on time it shouldn't effect your credit rating. Don't cancel any direct debits until the agreement has been settled. Ask them to explain why it would possibly effect your credit rating. Rachel

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Hello Rachel, I currently have a car and have paid 1 year off out of the 5 year agreement. I recently have a newborn which was unplanned and cannot afford the car now. What are my options? I know about VT but im not 50% through my agreement. Any advice thanks.

Answer

Hi Anthony, what is the settlement figure owed to the finance company and what is your car worth (trade value)?

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Hi, I'm now half way through my finance agreement with Motonovo so i rang them and told them i wanted to hand the car back as i know longer need the car. Their reply was it would go down on my credit rating as finance agreement unsettled.

All my payments have been on time so i can't really understand this. I am going to join credit experian and enquire about how and what way it would effect my credit. As my partner seems to think after a year and I'm still paying all my other bills on time than it shouldn't effect my credit and as long as i can explain to other lenders about this one default than it should be ok. I am wanting to buy a house and the last thing i want is for this to stop my chances of actually getting a mortgage. I do owe £2500 on the car and the market value for the car is around £1200. I really am unsure what to do!!??

Answer

Hi Richard, Thanks for using the Q&A. Firstly, we use equifax for our credit searches and I have never seen a voluntary termination shown on a credit profile. We only ever see a HP as settled or defaulted. I would advise that you contact equifax or experian and ask the question for clarity also. As far as I am aware the agreement will show as settled on your credit profile as the right to voluntary terminate is stated within your HP agreement and by handing the car back you are terminating the agreement.

This should not affect you obtaining a mortgage. As soon as the finance company dispose of the vehicle once you have handed it back they will settle/close the deal which will update your credit profile. Please beware that there may be certain charges should your car not be in a decent condition when you hand the vehicle back. Again, you'd have to speak with the lender as to their processes. Kind Regards, Rachel

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Hi, I've had a financed car for a month and a half and to be honest I can't afford £205 a month. Can I just hand it back or is there more to it? I'm not sure what type of contract it is but it's getting me down just thinking of it. Please help many thanks.

Answer

Hi Nicholas, as you've only had the car for just over 1 month you'd have to call the finance company and explain your situation. You can't just cancel the agreement and hand the car back unfortunately. Another idea would be to go back to the dealer who sold you the car to see if they could get you into a cheaper vehicle and they could take the current car off you and settle the finance. Do you know what the car is worth and how much you owe on finance? Kind Regards, Rachel

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Hello, I got a car on finance a year last September, and the agreement is paying £290 a month over 48 months. However, recently my situation has changed and I cannot afford the payments and it's stressing me out. I have never missed a payment despite this. My agreement states that I need to have paid off £7k before I can give the car back to the finance company, but that's another 15 months of payments which I cannot afford. I've tried selling the car privately (no luck as no-one likes to buy a car still under finance), and Ford's only offered me around £8k which would leave me to pay £2k for negative equity which I just don't have. Is there any way of me handing my car back and not being blacklisted or having a huge amount of money outstanding? Also, is it worth going back to Ford and getting an older car to cover the finance and reduce the payments? I'm a bit stuck on my options and I don't want to get ripped off.

Answer

Hi Charlotte, apologies for the delayed response. The only way out of the situation you are in is to sell the car privately or part exchange the car at Ford for a cheaper car. You can sell the car privately if you wish (and you'd get more for it) - all you need to do is get the buyer to pay the finance company directly rather than yourself. Any shortfall (negative equity) would have to be made up by yourself though at the time of the sale.

However, if you part exchanged the current car at the dealer they may well be able to wrap the negative equity up into a new deal on a cheaper car. Have you spoken with your dealer to see whether this is an option? If you have good credit we do have lenders that offer personal loans which allow us to place the negative equity into a new deal. As you have rightly pointed out you cannot "VT" your agreement yet and hand the car back as you aren't 50% of the way through the agreement yet. Kind Regards, Rachel

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Hi there, we have a car which we have paid two years off (no missed payments), we have 2 more years to pay but i had a stroke in July and don't feel confident to drive anymore.

We got finance through the dealers with Barclays. Could we give the car back and who would we approach to do so? Thanks for any advice you can give us.

Answer

Hi Lily, sorry to hear about your situation.

You have 2 options really. You can either hand the car back to Barclays as you're over 50% of the way through your agreement. Please call them to see of this is possible. Your other option is to sell the car privately and settle the finance with the proceeds.

Good luck and i hope your health improves soon. Have a good day. Rachel

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Hi, I have a car on finance through Audi and am 2.5 years through a 3 year agreement. I have read though many of the posts on here but still have a few queries.

At the end of the 3 years I will not be able to afford the final payment. Is there normally an option to extend the finance further?

Another option I have looked at is to hand my car back now. In the first year of my finance I was 1 payment behind for a few months although have been up to date ever since. Is this likely to cause a problem?

Finally, I feel a little bit stuck in a catch 22 situation at the moment. I need to reduce the cost of my car finance (Currently £550 p/m) but don't have a deposit for a new car (No real equity in current car) and due to recently moving house, my credit score has taken a bit of a battering although there is no missed payments in the last 18 months and do not have any CCJs or Defaults. Are there still companies that would consider me for 100% finance with no deposit?

Answer

Hi Andy, thank you for your detailed question.

In short, we need to find out what your car is worth now (trade value) and what you owe to the finance company (settlement figure). Once you have this information we can then determine whether you are in negative equity or not. If you're not in too much negative equity (under £500 approx) you can simply part exchange your car now at a dealer of your choice and they are responsible for settling the finance.

A deposit isn't necessarily required and as you only have a few missed payments here and there i'm reasonably confident we can get you accepted for finance and we'll be able to guide you through the process. Even if you decided to keep your car at the end of the agreement we could re-finance the balance if need be (you don't have to have the cash in your bank account to clear this immediately).

Please make an application when you are ready. Kind Regards, Rachel

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Hello, i am currently financing a car that we bought whilst living in Spain.

I'm about 2 years into an 8 year finance agreement. I have moved back to the UK and i want to know if i could hand it back in? Or if i could give it to a friend in Spain and he takes it on?

Answer

Hi Ben, thank you for your question and apologies for the delayed response.

I'm not too sure on the regulation surrounding finance agreements in Spain but if you could get a friend to obtain a new finance agreement to settle yours that would be perfect.

The other options are to bring the car back to the UK (if you're allowed) and keep paying for the car or just simply hand it back to the finance company in Spain giving them your reasons. Please bear in mind that if you do this it will effect your credit history in that country (not the UK).

I hope this has helped and if you need car finance now that you're back in the UK please make an application here. Please note that you must have retained some credit history in the UK whilst you were in Spain otherwise you'll need to build 3 years history back up before you can get credit again. Kind Regards, Rachel

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Hi, I bought a car on finance beginning of last march 60 monthly payments 0% finance £171 a month life time guarantee from Vauxhall.

Unfortunately, I've just been told I can't drive anymore because I have a heart condition!! What's the quickest and easiest way to end the finance deal or what can I do??

I can no longer afford the car as a need taxis to and from the hospital. Also, I have a monthly service plan of £14 a month and car insurance of £28. Any help ASAP!! Thank you

Answer

Hi Louise, thank you for your question and i'm sorry to hear about your condition.

The quickest way to get out of the agreement is to simply sell the car and settle the finance agreement with the proceeds. Have you requested a settlement figure from Vauxhall yet and do you know what your car is worth (private sale)?

I hope that you can resolve the problem ASAP.

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Hello, I have a car on finance from car giant with motonova on a 4 year contract. I have been paying my monthly repayments on time through out the year.

Its been one year and i am looking to part exchange the car as i am recently changing jobs and in need of a bigger car.

My vehicle is valued at £7000 and i cleared £2000 off. Would i have to clear of the finance? Wouldn't the finance company give me another finance and add the remainder on to a new finance?

Answer

Hi Jay, thank you for your question. Apologies for the delayed response.

The good news is that you can indeed swap your current car for a bigger on without any issues as long as we can get you accepted. You say you've had the car for 1 year out of 4. Do you know what your car is worth approx (trade value) and how much you owe MotoNovo. Hopefully you're not in negative equity. The dealer where you purchase your new car from will be responsible for settling the finance and we can finance your new agreement.

We deal with many lenders including MotoNovo so please make an application and if approved you can choose a car from any reputable dealer and we also provide a no obligation quote. Kind Regards, Rachel

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Hello Rachel, I purchased a 2006 golf on finance in March 2013, the car was valued at 4000. I'm now left with about 2500 to pay and I never missed any payments.Unfortunately,the car has now broken down and will require about 1800 to get it fixed as it needs a new engine. I filed a complaint with the finance company and they won't do anything about it as they say it's my fault on the the damage. Is there a way I can give up the car and possibly pay for the damage? Or any advice. Thank you.

Answer

Hi Henry, thank you for your query.

Sorry to hear that your having issues with your car. Due to the fact that you have had the car for over 2 years, to be honest I'm not sure if there is much that the finance company or ourselves could do to help in this situation. Normally, we would need the matter to be raised within 6 months of you taking out the finance deal.

However, if you would like to contact us on our complaints department, we would be happy to look into the matter further and see if there is any further advice that we may be able to give you once we know the full circumstances. you can access our full complaints procedure here: http://www.CarFinance 247.co.uk/complaints-procedure.htm

Kind Regards, Rachel

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Hi, I have finance with the car finance company for my Ford Fiesta (worth approx £10,000, i have had the car/finance since November 2014 payments of £285 per month and the contract is for three years. My circumstances at home have changed and i am struggling to live never mind trying to find £285 each month. i just cant see a way out of this darkness and i know there is no way i can find the money to pay off the 50% to give the car back. is there any advice you can give me to try and return the car (without going bankrupt) and get back on track without having constant stress? Thanks for reading, hope to hear back soon.

Answer

Hi Kate, thank you for your question, and sorry to hear you are experiencing issues paying off your finance.

Have you requested a settlement figure from your finance provider? Since your vehicle is worth £10,000, you could use this to pay off the remaining balance on your finance deal.

Kind Regards, Rachel

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Hi, I got a HP agreement 7 months ago for 5 years. I no longer need the car and would like to give it back. The finance company said if I give the car back and continue to pay the finance I will receive a default. Is this right? They also said I can't sell the car before I pay the balance off which is leaving me in a really tricky situation as I don't have a spare £11k hanging about. Is there anything else I can do?

Answer

Hi Rebecca, thank you for your question.

I would advise you request a settlement figure from your finance provider and could use your car as a part-exchange to cover some or all of this cost.

Kind Regards, Rachel

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Hello,

I bought a car brand new from Vauxhall in November 2013 on a 5 year 0% finance option. We are now expecting our 2nd baby, and the car no longer meets our requirements as it will be too small now with our other children.

My question is as this is a 0% finance, if I ring Vauxhall to get an 'early settlement figure', will the figure not just be exactly what I owe, or will they deduct money as we are settling the agreement early?

Also what would you recommend would be the best way to do this? Sell the car and pay off the finance, or ask Vauxhall to buy it back?

Answer

Hi Rebecca, thank you for your question.

In regards to your settlement figure, you will need to contact Vauxhall directly, as it will vary from lender to lender.

The decision to sell your car or trade it in with your dealer is entirely up to you! However, another option if you have been approved for finance with ourselves, is to part-ex your vehicle to cover some, or all of the settlement amount for your current vehicle.

Please make an application when you're ready and if approved you can choose a car from any reputable dealer and we also provide a no obligation quote. Kind Regards, Rachel

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Rachel Wilson, Underwriting manager

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Best available rate
Total repayment
Total cost of credit

Best available rate

Total repayment

Total cost of credit

We compare products from 18 of the UK's top lenders to get you the best deal.

Hitatchi

Representative example. Excellent Credit

Borrowing £7,500 over 48 months with a representative APR of 16.8%, an annual interest rate of 16.8% and a deposit of £0.00, the amount payable would be: £211.25 a month, with a total cost of credit of £2,640 and a total amount payable of £10,140.

CarFinance 247 is a broker and not a lender